A new report released today details how the circular economy can generate over US$1 trillion a year by 2025 for the global economy and 100,000 new jobs created for the next five years if companies focused on encouraging the build-up of “circular” supply chains to increase the rate of recycling, reuse and remanufacture.

The circular economy is built on the principle that stocks and flows of resources are rebuilt as opposed to degraded. This results in lower, and less volatile, costs, and holds huge potential for innovation and job creation. The circular economy aims to decouple economic growth from resource consumption. Project Mainstream can help mobilize this interest into an avenue for cross-industry action capable of taking the circular economy to the tipping point. The circular economy aims to maximize the value of materials when products approach the end of their use.

The report, Towards the Circular Economy, was released today at the World Economic Forum, in collaboration with the Ellen MacArthur Foundation at the Annual Meeting 2014 in Davos.

The report analyses the economic benefits for businesses shifting towards a circular economy, which rethinks today’s consumption patterns of “take, make and dispose” to a more restorative process, where products are designed and marketed such that components and materials can be reused many times. The report also highlights a new Forum initiative, Project Mainstream, which could help businesses to shift towards a circular economy and as a result save US$ 500 million in materials and prevent 100 million tonnes of waste globally.

“The circular economy is an opportunity industry can’t afford to miss,” said Sir Ian Cheshire, Group Chief Executive of Kingfisher. “It can drive our next generation of innovation and business growth, cushion our business from price volatility, provide us with competitive advantage, and help us build better relationships with customers and suppliers.”

With commodity prices almost tripling in the last 10 years, businesses and governments are now recognizing this as an opportunity to manage input cost volatility, as this approach decouples economic growth from finite supplies of primary resources. Manufacturing industries, in particular, could see their costs reduce significantly by adopting a circular business model. For example, material costs of smartphones could be reduced by more than 60% by entirely rethinking the way they are made and disposed. The report also shows the benefits of innovative business models such as Airbnb and Zip Car, and suggests improvements for profitability throughout the supply chain.